U.S. Securities & Exchange Commission asks advisory committee to examine shorter IPO timelines and lower public company burdens

The U.S. Securities & Exchange Commission published remarks for a Small Business Capital Formation Advisory Committee meeting that focused on the cost, timing and execution risks of initial public offerings, especially for smaller companies, and asked the committee to consider how the IPO process could be shortened without losing its discipline and rigor. The remarks present the issue as part of a broader effort to make going and remaining public more attractive. Questions posed to the committee covered whether the expected size of an IPO affects access to underwriters and offering terms, how much management time is diverted from running the business, how long an IPO should take, how much execution risk stems from that timeline, and which aspects of going and being public are hardest to anticipate. The remarks also pointed to work already underway, including a staff review of Regulation S-K at the Chairman’s direction to reduce compliance costs that do not provide commensurate investor protection benefits, and reiterated that mandatory arbitration provisions in a company’s governing documents do not affect decisions on accelerating a registration statement’s effectiveness. Separately, the speaker commended the committee’s recently approved principles-based recommendation on finders, which recognizes that the broker-dealer framework is not well suited to small capital raises involving community introductions.